William Thornton, Head of Residential Agency at youngsRPS, shares some insights on what the recent shift from a Conservative to a Labour government might mean for the property market in the North of England over the next five years.
Labour’s policies often focus on increasing affordable housing and enhancing tenant rights. During their campaign, Labour pledged to build hundreds of thousands of new affordable homes, aiming to address the housing shortage and make homeownership more attainable.
They also promised to introduce stronger tenant protections, including rent controls and longer tenancy agreements, to provide more security for renters. These initiatives could lead to an uptick in new housing developments and more stringent regulations for landlords. While these measures might increase rental availability and improve conditions for tenants, they could also mean higher compliance costs and operational adjustments for property owners.
Labour has also stated that first-time buyers will have priority access to new homes. Additionally, Labour intends to collaborate with housebuilders to give local people a right of first refusal on new houses before they are offered to international investors. This could help reinvigorate local communities, although this will only be effective if local people can afford these new homes. The current exemption from stamp duty land tax (SDLT) for first-time buyers purchasing homes priced up to £425,000 will aid affordability, but this exemption is set to end in March 2025. Furthermore, Labour plans to add 1% to the SDLT surcharge applied to overseas nationals buying UK residential property, raising the surcharge to 3%.
Unlocking potential development sites also requires addressing planning constraints. Labour has pledged to fund 300 additional local planning officers, which translates to less than one new planning officer for each of the 337 local planning authorities. While this policy may help fill current vacancies, it does not significantly increase resources. This pressure on resources will be compounded by Labour’s commitment to ensure that local plans are in place across all local authorities.
Labour’s emphasis on infrastructure development could benefit the north of England, potentially boosting property values in areas that receive investment in transport, schools, and healthcare facilities. However, proposed changes to property taxes and the potential for increased regulation might create uncertainty among investors in the short term.
Additionally, potential interest rate changes are a critical factor to consider. It is expected that a smooth transition during the government handover would enable the economy to continue its current trajectory.
Nonetheless, any new or amended policies introduced by the Labour government may influence the Bank of England’s decisions on interest rates. If policies are perceived to stimulate economic growth, we might see stable or even lower interest rates, which would be beneficial for mortgages and property investments. Equally, if policies lead to economic uncertainty or increased inflation, the Bank may decide to raise interest rates, potentially cooling the property market.
Overall, while the Labour government’s policies aim to address housing shortages and improve living standards, the exact impact on the property market will depend on how these policies are implemented and received. Homebuyers, sellers, and investors should stay informed about legislative changes and consider both the opportunities and challenges these new policies might bring.
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